Fundamental Analysis is a method used to evaluate the worth of a security by studying the financial data of the issuer. But this research can never accurately predict how the company will perform in the stock market.
It can however be used as a good comparative framework to know which company will be a better investment choice.As an investor, you are interested in a corporation's earnings because earnings assure higher dividends and potential for further growth.
You can use profitability ratios to compare earnings for prospective investments. These are measures of performance showing how much the firm is earning compared to its sales, assets or equity.You can quickly see the difference in profitability between two companies by comparing the profitability ratios of each.
Monday, April 6, 2009
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